Andhra Pradesh IT Minister Nara Lokesh has stated that new data centers will use dedicated industrial water allocations rather than city supplies. While the government highlights these projects as strategic for India's digital economy with a 6.5 GW capacity cap, the assurance comes amid ongoing public scrutiny and pending legal challenges regarding environmental impact.
Andhra Pradesh IT Minister Nara Lokesh addressed the State Assembly on Wednesday to clarify the water requirements for upcoming data centers in Visakhapatnam. Minister Lokesh stated that these new facilities will not interfere with the city's domestic water supply. Instead, the government plans to source water for these operations from industrial allocations under the Polavaram project, utilizing dedicated pipelines to prevent resource competition with local residents.
The government has placed a 6.5 GW capacity ceiling on the regional data center ecosystem, a target that officials noted has now been reached. Strategically, the state is positioning these centers to support India's growing AI-driven digital economy and data sovereignty. Minister Lokesh argued that the water consumption of these facilities would be managed through advanced cooling technologies, and compared the usage favorably against traditional thermal power plants.
For investors and stakeholders, the execution of this strategy relies heavily on the timely development of the promised water infrastructure. The plan depends on the successful completion of dedicated pipelines connected to the Polavaram industrial allocation. Any delays in this infrastructure could create operational risks for the facilities, given that Visakhapatnam frequently faces seasonal water rationing.
Beyond infrastructure, the projects are currently navigating significant public and regulatory scrutiny. Environmental activists and local community groups have raised concerns regarding the potential for water stress in an ecologically sensitive zone. These concerns have manifested in legal challenges, including a Public Interest Litigation (PIL) filed in the Andhra Pradesh High Court. The court is expected to hear the matter later in August 2026. This legal environment adds a layer of uncertainty for the timelines of major projects, including a large Google-backed data center currently under review.
Investors should monitor the outcome of the ongoing PIL and the progress of the dedicated water pipeline construction. The state government’s ability to balance the rapid expansion of digital infrastructure with local resource management and environmental compliance remains a key factor in the long-term viability of these large-scale investments.